Auto & Transport Roundup: Market Talk

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1308 GMT - Nikola is asking its shareholders to approve a reverse stock split to raise the hydrogen-electric truck maker's share price by reducing the number of shares. Nikola has been threatened with delisting by the Nasdaq Exchange after its shares repeatedly slipped below $1 in recent months. In a regulatory filing Nikola says it will ask shareholders to authorize the company to choose a split ratio ranging from 1 share for every 10 that shareholders now own to 1 share for every 30. Nikola wants to shrink the number of authorized shares by 600 million to 1 billion shares. The company has not yet scheduled its annual shareholders meeting. Nikola is down 4.7% at 93 cents in pre-market trading. (robert.tita@wsj.com)

1152 GMT - Michelin's first-quarter performance may raise eyebrows, but its full-year outlook remains reachable, Citi analysts say in a note. The French car-parts company should post slightly lower group sales than it did in last year's 1Q on a dip in volume of around 3.5%, Citi says. The underwhelming results could trigger pullback and profit-taking by investors, Citi says. If so, it would partly be because of high expectations for the tire market due to good data and January and February--not because Michelin can't hit its full--year revenue target, the analysts say. Citi keeps its revenue estimate intact but lowers its expectations for segment operating income by 0.8% to EUR3.61 billion. Shares fall 0.2% to EUR35.02. (david.sachs@wsj.com)

1117 GMT - Volkswagen Group's sales are up in China, and though the fierce competition there is still a factor, it is probably already reflected in the stock price for the most part, Citi analysts say in a note. The German car giant's first-quarter sales in China are 7.6% higher than a year prior, Citi says. While risks remain, the analysts say they are priced in, adding that VW's joint ventures in China lower the risk even more. "We think the risk to the premium [carmakers'] earnings in China is greater, off a much higher base, given investor expectations that the premium brands will continue to protect their market share positions--which we think will be challenged," the analysts say. (david.sachs@wsj.com)

0921 GMT - Volvo shares have been a long-term outperformer and it's now time for a breather, Citi analyst Klas Bergelind says in a note. "Following a decade long view of Volvo's shares being undervalued, we downgrade our recommendation from buy to neutral." Citi thinks 1Q results next week will see the last Ebit beat for a while and thinks the management call will reveal hesitation among European truck carriers to place orders. The bank says its valuation models suggest the re-rating has gone far enough and despite looking out to 2025, it struggles to see enough upside to warrant a continued buy rating. Citi increases its target price to SEK310 from SEK275. Shares trade 3.1% lower at SEK282.30. (dominic.chopping@wsj.com)

0635 GMT - Guangzhou Automobile Group may see lower-than-expected net profit in 2024, dragged by continuous joint venture market share loss and a sustained price war among Chinese electric vehicle makers, Citi analysts write in a note. Citi lowers its net profit forecast for the company for 2024-2025 by 4%-6% as it sees rising competition among local brands leading to a lower gross profit margin. While the management has said it doesn't have production reduction plans for its joint venture brands such as Honda, Toyota and Trumpchi, Citi notes that the joint venture brands have seen their market share decline lately. The bank keeps a buy rating for the H shares and lowers target price to HK$4.57 from HK$4.75. Shares last at HK$3.35. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

0559 GMT - Great Wall Motor's strong overseas sales outlook could support its business in 2024, Citi analysts say in a research note, after hosting a meeting with management. Management targets 2024 export sales of 500,000 units, compared with 316,000 units in 2023, with around 50% from Russia, the analysts say. Citi raises Great Wall Motor's 2024-2026 gross profit margin forecasts by 0.4-1.6 percentage points given the strong export sales growth momentum in the first three months and much higher overseas sales GPM compared with domestic sales, they say. As a result, Citi lifts Great Wall's 2024-2026 net profit forecasts by 4%-14%. Citi maintains a buy call on its H shares but raises its target to HK$14.70 from HK$10.90. Shares are last at HK$11.52.(sherry.qin@wsj.com)

(END) Dow Jones Newswires

April 11, 2024 12:20 ET (16:20 GMT)

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